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in today's cover story, is gold about to make a run to $2000 an ounce? plus, risking money in some etfs could lead to big rewards. but the operative word is risk. how americans are helping the u.s. government chip away at the federal deficit. and, it could be bottoms-up for investors in a beer and wine stock. keep it here. first business starts now! you're watching first business:
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financial news, analysis, and today's investment ideas. good morning. monday, october 8th. i'm angela miles. in today's first look: a new round of corporate earnings start up this week. overall, earnings are expected to tumble around 2% from last year. here's where we last left of on friday. stocks rallied on news the unemployment rate dropped to 7.8%. the dow gained, the s&p was flat, and a sell-off in apple dragged down the nasdaq. oil and gold staged dramatic pullbacks. today, platnum and gold producers will push to end a strike by south african workers over low wages. philip streible of rjo futures joins us on this monday morning. will we see a follow-through from that jobs number that came out on friday? > > that's a really interesting question. the reason why i bring that up is because the market reaction to the number, it was really well received. we saw the s&p 500 push up to 2007- level highs. but as the day went on, it really started to adjust
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the data, started looking at the larger global picture, and we saw the stock market start to pull back aggressively. so, it's going to be a tough call for the week going forward. > > we also start a new round of earnings on tuesday philip. > > i think that that's what's going to start the next major trend. alcoa comes out after the bell. generally they try not to disappoint. we are probably going to see the s&p match the previous week highs, and if it breaks through that 1477, i think we're going to shoot for 1500. > > what commodities are on your watch list for the new week? > > probably the most important one is still oil. oil is something that everybody knows about, and oil prices have backed off from $100, dropping below $90. and, they're really weighing on weekly department of energy inventory stocks. so if we see any kind of drawn-down on wednesday's figure coming out, we might see oil pose a turnaround. > > thank you and have a great
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week. > > thank you. suspicions about the september jobs number appear to have started with a tweet. shortly after the postive news was revealed, jack welch, former ceo of ge, tweeted: "unbelievable jobs numbers. these chicago guys will do anything. can't debate so change numbers." betsey stevenson, the former chief economist in the labor department, tweeted back: "anyone who thinks that political folks can manipulate the unemployment data are completely ignorant about how bls works and how data are compiled." according to the labor department, the unemployment rate dropped to 7.8%. the number of people hired for full- time jobs rose by 838,000. part-time workers dropped by 26,000. we'll have more on the date later in the show. protests are expected as german chancellor angela merkel travels to greece this week. tuesday's visit will be the first by merkel since the debt crisis erupted. the prime minister of greece told reporters friday athens will run out of money at the end of november if it doesn't get another bailout.
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germany has been pushing greece to make severe budget cuts. labor unions are at the ready to protest those cuts that affect their salaries and pensions. where's gold going? prices and the latest jobs report have led some to wonder if this is the beginning of stabilization, which could trigger inflation and, in turn, send gold prices higher. the drop in the unemployment rate below 8% triggered a dip in gold prices and led some to wonder if the end of quantitative easing - dubbed qe 3 - was any closer. "when is the endgame going to be? that's why people are buying gold and putting it in a safe deposit box." "we are going to have qe3 to infinity. that's no joke. bernanke is going to keep interrest rates low until there's clear evidence this economy is recovering."
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niemann says the number of jobs may have picked up, but not enough high-paying ones to stimulate consumer spending. that may keep inflation low, which would not drive up gold. but others believe there are too many variables in the world, and that leads others to think gold may be headed higher. "i think looking at the situation in europe and elsewhere, we're in for a year or so of instability and gold could head to two." "two," as in two thousand dollars an ounce. or is that too much? "i think $2000 is probably years away more than months away. it'll take more than a little growth and inflation to get it going." but some portfolio managers say the latest jobs data "put an end to the idea that [quantitative easingwould last forever. as for gold topping $1800, "we've been getting so
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close but it has turned into a greater line of resistance than we thought." another variable to watch - seasonal factors may come into play and may encourage etfs, exchange-traded funds, to flow into gold at the end of the year. the economy may not always feel like it's on the rebound, but according to a new survey, big- time money managers believe it is. a survey of 100 investment managers by northern trust reveals they see less risk in the economy. 87% said gdp will remain stable or accelerate. 57% expect job growth to remain stable. 69% believe housing prices will increase and 62% say the latest round of quantitive easing will have a postive impact on the market. ahead of the election and after the presidential debates, small businesses are clearly in focus as a jumpstart to the u.s. economy. the atmosphere is improving, lending is up, and more people are scoring money to start their own businesses. while running a business has its perks, a lot of startups
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happened as a result of necessity after layoffs during the slowdown. but lenders at the small business expo in chicago have a positive outlook for the future. "when the economy first tanked, people were too afraid to launch their own businesses. but that's behind them now, so we are seeing lenders who are making loans as well as small private loans up to $15,000." "i think a lot of people who were unable to get jobs have launched their own companies or might have gotten an early retirement package." one small business owner said he plans to get his college degree and attend grad school, but some of that depends on the success of his new business begun in june - an app that connects riders with cab drivers and eliminates the need for credit cards. "if all goes well i plan to put my time elsewhere and develop my company." overall, the mood at the small business expo was upbeat. there's plenty of action from financial firms. customers are closer to getting some of the
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money they lost when lehman brothers collapsed. the $38- billion settlement just needs the okay by the bankruptcy judge. federal regulators for credit unions are suing credit suisse group for the sale of mortgage-backed securities. the firm is accused of misleading statements and omitting important details. the shake-up by jpmorgan chase may not be over. the wall street journal reports another top executive may leave in the wake of the multi-billion dollar trading loss. a top executive at avon is leaving the company. the company's chief executive andrea jung plans to say goodbye at the end of the year. jung has been with avon for 13 years. avon has faced its fair share of troubles in recent years, including declining profits and an sec investigation into a possible bribery scandal. jung will reman on avon's board following her departure. the market is shaking off the facebook ipo debacle. ipos are
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up 3% this year. 9 are possible this week. one stock is tied to the real estate industry. realogy holdings corp. plans to sell 40 million shares in a $1- billion ipo. century 21 and better homes and gardens real estate are part of the business. the ticker symbol is "rlgy." but for now, it's game over for dave and buster's. the entertainment restaurant's debut was cancelled last thursday. the company blamed current market conditions. honda odyssey minivans are rolling away. more than 577,000 vehicles from 2003 and 2004 with automatic transmissions are being checked to make sure drivers cannot remove the ignition key and walk away without shifting into park. the automaker reports so far two people have been injured when that's happened. federal traffic safety regualtors are investigating the minivans and the accidents that have happened. so far the vehicles have not been recalled. unions representing american airlines say layoff notices are going out to mechanics and other ground crew workers, but not as many as first projected.
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450 people will lose their jobs according to reports, but there were earlier indications the airline needed to lay off more than 2700 empoyees. on top of the new round of cuts, last week, american said 709 mechanics and maintenance workers chose to take an early retirement. tuition is ticking up at private colleges. the cost of private colleges and universities rose an average of 3.9% this year, which is actually better than it has been. the national association of independent colleges and universities reports tuition increases have remained near 4% since the recession. and the group says this is the first time a tuition hike has been under 4% - ever. phil mickelson will take a shot at $1 million. during next monday's night's football game between the san diego chargers and his home town denver broncos, the pro golfer will take a swing for chartiy. if he hits a long shot target across the field, he wins a million dollars in books for some
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deserving childern. the challenge is set up by kpmg chip 4 charity. many americans are helping pay the tab on the nation's debt. americans have given around $7 million to the federal deficit as part of a donation program. the "bureau of public debt" has been around since the kennedy administration. americans really started to chip away at the $16 trillion debt last year. it was the biggest year for donations since 1994. still to come, fresh ideas on where to invest. but first, we are weaving through the numbers to find out what matters most of the latest data on the job market. that's next with bill moller.
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ent numbers came out on friday, and here we are monday morning and everybody's still seems to be scratching their heads over what it all means, because there seems to be some conflict within the numbers. the let's talk with brent scutte, he is market strategist for bmo private bank. ok. big news: the unemployment rate drops to 7.8%, one of the biggest drops we've seen in years. yet, the number of jobs created was fewer than last month. explain this. > > sure. this one's a little bit of a head-scratcher, and it has a lot of people coming out with conspiracy theories. i'm not usually one to subscribe to them, but it is a little odd. what youave en you measure
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employment ithis country is you have two reports: the establishment survey, where they go out and they survey 400,000 businesses and they look at their payrolls and see how many people are on the payrolls. that has the 114,000 headline number you saw. the way unemployment rate is measured is a survey. so they call 60,000 households, they take a survey, they extrapolate that out into the whole economy, and then they divide that number of people who show in that survey that they're unemployed, they divide it by the total workforce. and that is how you actually come up with an unemployment rate. curiously, while the establishment survey showed 114,000 people were added to the payrolls, the survey showed that 873,000 people were added, which is the largest job gain since january of 1983. > > why would that not be factored in then? > > it is factored in somewhat. the way- > > it's complicated. > > it's complicated. > > because you know all this stuff, but you're hesitating because- > > it's very complicated. the fact is, it seems a little odd that so many people were added to the workforce. if you look back historically, there are very few times in history where
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the unemployment rate has fallen by 3/10 of a percent. in fact, since 1990, there have only been at nine times, including this one, where the unemployment rate has fallen by 3/10 of a percent. that's kind of the oddity that people are focusing on right now, which, to me, given the environment we're in, does seem a touch odd. > > so what do you look at that's important? do you look at the payroll numbers? do you look at the participation numbers? > > all of them are important. they all serve and weigh into your forecast. the participation number is important because you need people participating in the workforce to push a country forward. that's at the lowest level it has been in 30 years. so there are fewer people today participating than there have been since 1981 in the workforce. the overall employment number is probably the most respected, the 114,000. that's crucial for the economy. you really need to see that kick up into the 200- to 250,000s before we start making headway into the employment problem that we have right now. > > every month they revise that number, so that will probably be changing soon. > > sure. these all are- not guesses, but there's a lot of deviation around them. and as we saw, i think last year's employment numbers were revised up 384,000 are the latest numbers. > > we'll talk to you in a month to see if we can stop scratching our heads. brent scutte, from bmo private bank. thanks.
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still ahead, has the time come to start getting risky with your money? we'll find out next.
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the stock market keeps heading higher. is now the time to start taking some risks with your money? brian kasal of fort dearborn group joins us this
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morning. good morning brian. > > good morning angie. > > what are you doing with your money right now? where are you investing? > > we're still investing in stocks. stocks are interesting here. money keeps flowing into the u.s. markets for many different reasons, so we think there are still gains to be made there. then there are opportunities in fixed income, although not the traditional areas, which we can talk about in a second. > > a lot of money managers have been coming on this show and they're talking about buying those dividend-yielding stocks. everyone is doing that right now. but what else do you say you have up your sleeve? > > like many, we're interested in precious metals. but one of the areas we think is very interesting right now angie is the area of master limited partnerships. investors are clamoring for yield, and there's really nowhere to get much yield. master limited partnerships were created in the 1980s, and they're basically set up to house assets of natural resource companies. primarily gas pipelines, but there are some timber and some other limited partnerships that invest in those as well. primarily gas pipelines. so the yields are higher. because they're partnerships, the tax
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break is they don't pay any corporate taxes. so they pass on more of the distribution to the investors. so, the range of yield is anywhere from the mid- 4s to some as high as high 6s. so we run a couple portfolios that have five average 6% yields in master limited partnerships. so, it's a little more gamey. they trade essentially like bbb corporate bonds. but they pay a little bit more than bbb corporate bonds. so it's not for everybody, and it's not for your whole income portfolio. but- > > it's a little bit of a risk. > > yeah. there is more risk. it's in the safer area of your portfolio, but it offers more yield and a little bit more risk than traditional bonds. but for the right person it can be a nice way to enhance your yield. > > do these mlps track what's going on with oil or natural gas? > > not as much. when you think about how they function, essentially, if you own the pipeline, and companies run oil and gas through your pipeline, they're paying tolls. so you're
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like the tollbooth operator, and you charge them a certain fee every time they go by. so, there's always an amount of activity in the oil and gas industry, whether prices are high or low, so they have less sensitivity to oil and gas prices. although there's some, it's minor. there have been very few mlps that have ever cut their dividend. most of them have been raising their dividend over the years. > > brian kasal of fort dearborn group. thanks for bringing that to us today. > > thanks angie. up next, is liquor quicker when it comes to investing? high spirits are next in chart talk. but first, this in-the-know message.
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we are toasting to andrew keene, president of, this morning. good morning andrew. > > good morning angie. > > you have your eyes on constellation brands. this is a company involved with wine and liquor, and that is a competitive industry. what do you see in the charts that you like? > > how can i not possibly want to get long a stock that, a) is hitting its 52-week high on a
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daily basis, and b) sells corona. i mean, corona light with lime, that's my favorite. so constellation brands, like you said, they do do a lot of different products - corona, modelo, pacifico on the pier side, then they do some wines. and they actually do svedka vodka, i didn't know that one. but, i got long it before they had earnings. it broke out to the upside, broke through that $35 level, which might have possibly had a resistance. the stock is up about 17% this year. it's up about 35% since the 52- week low, so the stock has been on fire. it's on this perfect channel that i like to see as a trader: from the bottom left to the top right. i'm looking to get long on any pullback. i'm currently long it right now. i think if it pulls back to 35 i'll add to my position. there was a big option trade implying the stock could get above $40 by january. a customer bought the january 40/45 bull call spread, so someone thinks it has more upside to come. at $36.50, i'm not going to add to my
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position, but i'll be looking for a pullback to add to my long position. > > there could be some headwinds for this, because drinking is slowing down in europe while demand is still kind of stiff here in the united states. what do you think about that? > > like they say, the the united states is the best house in a bad neighborhood. 80% of their sales come from the united states, so they're very very strong in the united states. they don't have a lot of overseas presence, which is also why i like the stock. i think only about 4% of their sales come from europe, so that's a good thing. as the economy weakens, where do people go? they go to these sin stocks. as terrible as it is to say, when the economy's a little bit weaker, when unemployment is not that good, they tend to drink a little bit more. so actually these companies - if you look at pm, philip morris, that's on a 52-week high as well. these are the sin stocks that actually work well when the economy is a little bit weaker. i think stz is headed one direction and that's to the top right, and i think it's going to $40. > > andrew keene, president of > > thank you. that's it for today. coming up tomorrow, a glimpse at how candidates buy their way into office. the author of "billionaires & ballot bandits: how to steal an election in 9 easy steps" will be here. thanks so much for joining us today. have a great monday.
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good morning. city crews and business owners cleaning up in oakland this morning. the damage done during an antiwar protest. we are less than one month away from election day. what president obama will be doing today in his last trip to the bay area ahead of november 6th. and gas hits another record this morning. the steps governor brown is now taking to try to bring things down. it's all ahead on the ktvu channel 2 morning news.
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good morning. thank you for joining us on this monday morning, october 8th i'm pam cook. i'm hearing a little tiny chance of rain but let's check in with our expert steve paulson. >> unless you are a boat heading out on the pacific, maybe. for us a little cool here this morning and mostly clear skies. highs today come down just a little bit. 60s and 70s. here is sal. steve, good morning. right now traffic does pretty well around the bay as we look at some of the roads. we are off to a nice start on 80 westbound as you head out to the mccarthur maze with no major problems. alsos morning commute looks good at the bay bridge toll plaza. let's go back to the desk. topping our news this morning a group of protestors left a trail of destruction in downtown oakland. tara moriarty is on franklin street this morning. >> reporter: the windows have

First Business
FOX October 8, 2012 4:00am-4:30am PDT

News/Business. Angie Miles. (2012) New. (CC)

TOPIC FREQUENCY Angie 4, Europe 3, Chicago 2, Bmo 2, S&p 2, Dearborn 2, Brent Scutte 2, Brian Kasal 2, Andrew Keene 2, Kennedy Administration 1, The National Association 1, Ge 1, Ktvu 1, Youave 1, Oakland 1, Alcoa 1, Athens 1, The S&p 1, Expo 1, The Mood 1
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